The number of Very Large Crude Carriers (VLCCs) filling up on oil is set to soar in the US, as the premium for long-dated US crude oil futures grows.
After a mid-July escalation, traders are looking positively to store more crude and generate a profit.
The discount of front-month to second-month oil futures has nearly doubled since 13 July, to $1.75 (1.23) per barrel from $0.89, a level that covers the cost of storing crude in tanks or vessels to sell for higher prices in later months.
Onshore storage in the US currently costs $0.75-85 per barrel a month, while storage in offshore tankers costs $1.02, traders and shipbrokers say.
An industry insider notes that the current contango is of a sufficient size to spark a new round of buy and store programmes on VLCCs offloaded last May when the oil curve strengthened.
In addition to the expansive contango, bargain prices for chartering (VLCCs), which can store around 2 million barrels of oil, may help revive the offshore storage trend.